Europe shares close lower; further Russia sanctions weigh

European shares were lower on Friday, with investors reacting to earnings news and economic data releases amid ongoing events in Gaza and Ukraine.

European shares ended the day lower on Friday, as concerns about the impact of tougher sanctions against Russia weighed amid ongoing unrest in Ukraine.

Sanction worries

The pan-European FTSEurofirst 300 index closed down 0.8 percent at 1,371.21 after fluctuating earlier in the day, as concerns over continued unrest in Ukraine and Gaza weighed on markets. In the U.S., stocks followed Europe lower, following weak Amazon earnings .

It came as Reuters reported that the European Union had reached a preliminary agreement on tougher economic sanctions against Russia after the downing of a Malaysian jetliner in eastern Ukraine last week.

Details of the penalties have not been released, although sources told the news wire that European Council leader Herman van Rompuy had said any restrictions agreed on Russian access to sensitive technology should only include the oil sector, and exclude gas.

"There are major concerns about the economic impact that tougher sanctions on Russia will have on the euro zone," Investec Capital Markets analysts said in a note.

EU corporate leaders talk sanctions

With the threat of further EU sanctions against Russia, CNBC talked to some leading European CEOs and CFOs about the potential impact of sanctions on their businesses. Here's what they had to say.

In Gaza, pressure on regional leaders for a ceasefire intensified, according to Reuters. It comes after authorities said that 15 people were killed on Thursday at a U.N.-run school, the news agency reported.

Data weighs

The German DAX closed down around 1.6 percent after business sentiment in the country fell for the third consecutive month, according to the Ifo think tank. Its July index slipped to a figure of 108.0, below estimates in a Reuters poll and last month's figure of 109.7.

Naeem Aslam, the chief market analyst at Avatrade, called the number "appalling", and the data pushed the euro slightly lower against the dollar.

"The Russian sanctions are a big headache for the German companies and this data is clearly a reflection of this," Aslam said in a note.

Elsewhere, data showed the U.K. economy continued its robust expansion in the second quarter, and is now larger than at its pre-crisis peak at the start of 2008. The Office of National Statistics (ONS) said on Friday that second-quarter gross domestic product (GDP) came in at 0.8 percent on the quarter, which met economists' expectations.

The U.K.'s FTSE 100 turned positive after the news, but slipped lower in afternoon trade. The index provisionally closed down 0.5 percent.

The household goods sector was the main laggard on Friday. Shares of LVMH plunged to the bottom of benchmarks after reporting earnings on Thursday evening that were below expectations. Several banks and asset managers cut their rating outlook on the luxury goods firm and its stock slipped 6.8 percent on Friday.

Shares of Rupert Murdoch-backed BSkyB closed around 5.4 percent lower after it announced plans to create a European pay-TV powerhouse with the purchase of 21st Century Fox's stakes in Sky Italia and Sky Deutschland.

Heavily-weighted Vodafone saw its shares rise over 2 percent on Friday, after the telecoms firm said some of its key European markets were showing signs of stabilization. The company did, however, report lower-than-expected growth for the first quarter.